Beijing developer Soho China says rents in the capital are too high to sustain and may see a sharp correction. Chairman and co-chief executive Pan Shiyi said Beijing property prices were affordable but rents had reached unreasonable levels. 'Rents in Beijing are unreasonable and have to come down. But prices will rise,' he said. Mr Pan would not make a forecast but said that even if rents for offices and flats fell 50 to 60 per cent, the investment yield would remain very high. He said the average rental yield in Beijing was more than 10 per cent and the return of his company's projects was even higher, at 15 per cent or more. His wife, co-chief executive Zhang Xin, said Beijing's rental level was abnormal and rentals generated from a property more than doubled mortgage outlay. 'In Hong Kong, rents may not be able to cover the mortgage while in New York and London, they basically even out,' she said. Premier Zhu Rongji reportedly expressed concern late last year that a speculative property bubble had emerged in certain regions of China. However, Mr Pan said there were no signs of a bubble building in Beijing's property market as there was no rampant speculation on sale and purchase. He said prices had not increased too much in the past three years, with most buyers being end-users. There was room for prices to rise further in Beijing, especially with the massive infrastructure developments arising from the 2008 Olympics stimulating property market growth. Soho China, which withdrew a New York listing application this week, was understood to be planning a Hong Kong initial public offering to raise US$100 million to US$200 million by the end of March. The company recorded a profit of 130 million yuan (about HK$122.04 million) on a turnover of 1.8 billion yuan in 2001. Its profit was 80 million yuan in 2000 with one billion yuan turnover. The group is undertaking a 690,000 square metre upmarket office-retail-residential development Jianwai Soho in Beijing. It is also engaged in a joint-venture development in Chaoyang district, comprising logistics facilities, flats, hotel and golf course. Mr Pan yesterday would not disclose the capital expenditure required for the projects. However, he said Soho China had sufficient financial resources to cope with its project requirements, although a listing could speed up expansion.